Corporate Governance Mechanism, Company Size, and Earnings Management

DOI: 10.5176/2251-1997_AF114

Authors: Dian Indriana Trilestari and Vidi Arini Yulimar

Abstract:

This research aims to analyze empirically the impact of corporate governance mechanism proxied by commissary board’s size, audit committee’s size, institutional ownership, managerial ownership, and company’s size on earnings management in Indonesian Stock Market year 2008-2009. Good corporate governance is expected to affect financial report through transparency, accountability, responsibility, independence, and fairness. The population is all companies listed in Indonesian Stock Market year 2008-2009 as many as 148 companies. The sample is drawn by using purposive sampling technique and results in 95 companies. The data are analyzed by using multiple linear regressions with t-test. The hypotheses analysis results show that commissary board’s size, institutional ownership and company’s size have significant impact on earnings management measured by discretionary, while audit committee and managerial ownership do not have impact on earnings management.

Keywords: corporate governance mechanism; earnings management; commissary board’s size; audit committee; institutional ownership; managerial ownership; company size